WTI Price Forecast: Sees more upside above $76
- The Oil price corrects from an almost five-month high of $75.54 as the US is not expected to strike Iran immediately.
- The White House stated that it will discuss about Iran in next two weeks.
- An Ascending Triangle formation on an hourly timeframe indicates volatility contraction.
West Texas Intermediate (WTI), futures on NYMEX, recovers its early losses and ticks up to near $73.70 during Asian trading hours on Friday. The Oil price opened on a weak note as comments from the White House signaled that they have no intentions to strike Iran immediately.
US Press Secretary Karoline Leavitt stated on Thursday that there is a chance of negotiations with Iran, and Washington will decide about attacking Iran in the next two weeks.
These comments from the White House have eased fears of escalating Middle East tensions, resulting in a pause in the Oil price rally. Meanwhile, demand for safe-haven assets, such as the US Dollar (USD), has also diminished. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects to near 98.60 from the weekly high of 99.15 posted on Thursday.
The appeal of safe-haven assets strengthened on Thursday after a report from Bloomberg indicated that senior US officials are preparing for the possibility of a strike on Iran in the coming days.
WTI Oil price trades in an Ascending Triangle formation on the hourly timeframe, which indicates indecisiveness among market participants. The horizontal resistance of the above-mentioned chart pattern is plotted from the June 13 high around $74.75, while the upward-sloping trendline is placed from the June 16 low of $67.85.
The 200-hour Exponential Moving Average (EMA) slopes higher around $70.00, suggesting that the overall trend is upside.
The 14-day Relative Strength Index (RSI) wobbles inside the 40.00-60.00 range, indicating a sharp volatility contraction.
The Oil price would extend its upside towards the January 21 high of $77 and the psychological level of $80, if it breaks above the June 19 high of $75.54.
On the contrary, a downside move below the June 18 low of $71.20 would expose it to the 200-hour EMA, followed by the June 16 low of $67.85.
WTI hourly chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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